Podcast Summary: CRYPTO 101 - Ep. 650: The Current State of Crypto & What is Next
Introduction
In Episode 650 of CRYPTO 101, hosts Bryce Paul and Brendan Viehman delve into the evolving landscape of cryptocurrency with special guest Kyle Reed. As the co-owner and head of research at Milk Road and co-founder of Impact3, Reed brings a wealth of experience and insights into the current state and future trajectory of the crypto market.
Guest Background: Kyle Reed's Journey into Crypto
Kyle Reed begins by sharing his diverse background, spanning over a decade in the creator economy, involvement in online coaching, and early investments in emerging industries like social media and marijuana legalization in Canada. His pivot to cryptocurrency was catalyzed in 2019 after his Facebook account—and consequently his marketing agency's primary platform—was inexplicably banned, prompting him to explore decentralized alternatives.
“[00:46] Brendan Viehman: ...you had your whole business run on Facebook, and they just, like, deleted my account... [Kyle Reed] ... I saw where this world is going... I need to figure out how that's going to impact my clients.”
[00:46]
This incident not only disrupted his business but also illuminated the potential of blockchain technology and decentralized platforms, leading Reed to immerse himself deeper into the crypto space.
Building Milk Road: From Impact3 to a Leading Media Platform
Reed outlines the evolution of his ventures, starting with Impact3, a marketing agency founded in 2019 that initially focused on clients in the traditional online space. As Reed and his team delved into crypto, they began transitioning clients to blockchain-based projects, with their first major client being Bankless. Their success in scaling Bankless from 15,000 to over 300,000 subscribers showcased their ability to apply Web2 marketing tactics effectively within the crypto domain.
Subsequently, they acquired Milk Road, a media brand similar to their existing ventures, integrating it into their operations to enhance their community outreach and investment education efforts.
“[07:56] Kyle Reed: ...Milk Road. ... our main goal at Milk Road is like, we... We want to help people invest in this space... [and] help people come financially free.”
Investment Philosophy: Long-Term Approach and Compounding
A significant portion of the discussion centers on investment strategies within the volatile crypto market. Reed emphasizes a long-term investment philosophy, discouraging the prevalent short-termism and "get rich quick" mentality.
“[11:33] Kyle Reed: ...look, crypto is a place where the gains are incredible... you need to do this long term. You need to compound your results year over year...”
He advocates for consistent, long-term strategies akin to those employed by legendary investors like Warren Buffett, highlighting the importance of patience and disciplined investing to achieve substantial returns over time.
Evaluating Crypto Projects: Focus on Adoption and Network Effects
When assessing the viability of different cryptocurrencies, Reed stresses the importance of adoption and network effects over mere transactional metrics. He suggests that the true measure of a blockchain's potential lies in the number of developers, businesses, and institutions building upon it.
“[16:02] Kyle Reed: ...we're looking at adoption... how many active developers or teams or businesses rely on these protocols... it's about network effects.”
Reed illustrates this by discussing Ethereum's enduring relevance despite perceptions of it being "dead," attributing its resilience to the vast ecosystem of projects and institutions dependent on its platform.
Institutionalization of Crypto: Balancing Decentralization and Mainstream Adoption
The conversation shifts to the role of institutions in the crypto ecosystem. Reed acknowledges the skepticism among early adopters regarding institutional involvement but argues that such participation is inevitable and beneficial for mainstream adoption.
“[20:12] Kyle Reed: ...I'm fully supportive of institutions coming on chain... they have the option if you want to learn to go and get on chain and custody it yourself and interact with the protocols yourself...”
He envisions a hybrid future where traditional financial institutions offer DeFi-like services within familiar interfaces, providing users with the choice between centralized ease and decentralized control.
Defi Insights: Stability and Revenue Generation
Reed expresses a bullish outlook on Decentralized Finance (DeFi), citing its maturity compared to other crypto sectors. He highlights protocols like Maker and Aave, which have demonstrated robust revenue streams and resilience through various market cycles.
“[28:55] Kyle Reed: ...they've established products, they've been through these crazy ups and downs... protocols like Maker or Aave... Maker's goal actually for the end of this year is to have no core expenses...”
He points out that DeFi protocols generate substantial revenues with minimal expenses, positioning them as attractive options for both retail and institutional investors seeking sustainable growth.
Market Cycles and Future Prospects
Reed draws parallels between crypto market movements and traditional financial cycles, emphasizing the influence of broader economic factors such as liquidity and business cycles on asset performance. He anticipates a DeFi renaissance as regulatory clarity improves and liquidity increases, potentially leading to significant advancements and adoption within the space.
“[29:08] Kyle Reed: ...crypto moves in similar fashion to the way most financial assets move, which is through the business cycle and through the liquidity cycle...”
Closing Advice: Emphasizing Long-Term Thinking and Emotional Discipline
In his concluding remarks, Reed reiterates the importance of maintaining a long-term perspective and managing emotional responses to market volatility. He advises investors to "zoom out and chill," focusing on the broader trends and fundamental strengths of their investments rather than short-term price fluctuations.
“[35:34] Kyle Reed: ...think long term. ... zoom out and chill... 90% of investing, in my opinion, is just mental. It's psychological...”
He encourages listeners to develop emotional resilience and disciplined investment habits to navigate the inherent volatility of the crypto markets successfully.
Connecting with Kyle Reed and Milk Road
For listeners interested in further insights and updates, Kyle Reed can be followed on Twitter (@KyleReedHead) and through Milk Road's website at milkroad.com. Additionally, those seeking marketing expertise within the crypto space can explore Impact3 at Impact3Co.
Conclusion
Episode 650 of CRYPTO 101 offers a comprehensive exploration of the current crypto landscape, underscored by Kyle Reed's expertise and forward-thinking perspective. From advocating a disciplined, long-term investment approach to highlighting the pivotal role of DeFi and institutional adoption, the episode provides valuable guidance for both novice and seasoned investors aiming to navigate and succeed in the dynamic world of cryptocurrency.